For more than two decades, a patent infringement defendant could be liable for inducing infringement if it was reckless or even merely negligent in doing so. A plaintiff trying to prove inducement could win by proving that the defendant actually intended to cause the acts that constitute direct infringement and that it knew or merely should have known that its actions would induce actual infringement. That just changed.
Reversing 23 years of precedent, Commil USA, LLC v. Cisco Systems, Inc., No. 2012-1042 (June 25, 2013), holds that:
- Negligence or even recklessness fails to satisfy the intent requirement of inducing infringement;
- Actual knowledge or willful blindness is required because of Supreme Court authority stating that “a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts.” Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2070-71 (2011) (citations omitted); and
- Cases such as DSU Medical Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1306 (Fed. Cir. 2006) and Manville Sales Corp. v. Paramount Sys., Inc., 917 F.3d 544, 553 (Fed. Cir. 1990), which approved the negligence standard for induced infringement, are no longer good law in light of Global-Tech.
In what the opinion described as issues of first impression, it also holds that:
- A good-faith belief that the patent is invalid may negate the requisite intent for induced infringement; and
- Evidence about that good-faith belief is admissible and should be considered by the fact-finder in determining whether an accused infringer knew, consistent with the Global-Tech standard, that the induced acts constitute patent infringement.
Why does this matter? Because patent infringement claims against technology companies often involve claims for induced infringement, as do many patent jury verdicts and indeed many of the largest patent jury verdicts. In fact, Commil itself involved a nearly $64 million jury verdict for indirect infringement—now reversed because of the changed standard.
The evolution of the now-superseded law
Before the Patent Act of 1952 (“Act”), no statute defined “infringement.” Instead, “infringement” had been judicially divided into two categories: “direct,” which was the unauthorized making, using or selling of the patented invention, and “contributory,” which was any other activity where the defendant displayed sufficient culpability under a theory of joint tortfeasance to be held liable as an infringer. The Act added 35 U.S.C. § 271(b), which provides that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” Although its legislative history reflects that the Congress didn’t intend to change the scope of what constituted “contributory infringement,” it wasn’t initially clear what level of intent “actively induces” required. As early as Manville Sales Corp. v. Paramount Sys., Inc., 917 F.3d 544 (Fed. Cir. 1990), the Federal Circuit applied a standard that encompassed negligence: “the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.” Id. at 553 (emphasis supplied).
However, in 2011, the Supreme Court decided Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060 (2011), which addressed what intent level “actively induces infringement of a patent” required. The Court acknowledged that the statutory language was ambiguous and that the pre-Act jurisprudence was mixed. The Court thus looked outside the patent law to the doctrine of willful blindness, which the Court concluded aptly applied given the doctrine’s entrenched presence in federal jurisprudence generally. The Court concluded that the Federal Circuit’s test departed from the proper willful blindness standard in two important respects. First, it permitted a finding of knowledge when there was merely a “known risk” that the induced acts are infringing. Second, in demanding only “deliberate indifference” to that risk, the Federal Circuit’s test inappropriately failed to require active efforts by an inducer to avoid knowing about the activities’ infringing nature.
The Commil opinion
In Commil, an Eastern District of Texas jury found that the defendant had induced the infringement of the defendant’s patent and awarded $63.7 million in damages. The defendant had objected to the induced infringement instruction, which recited verbatim the Federal Circuit’s language in Manville Sales, supra; that language, as noted, encompassed recklessness and even negligence. The defendant argued that Global-Tech, supra, rendered that instruction wrong. The district court overruled the objection and denied the defendant’s post-trial motions.
The Federal Circuit reversed. Without dissent, the opinion concluded that the Federal Circuit’s former test could not stand because, in Global-Tech, the Supreme Court reasoned that “a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts,” but that “[b]y contrast, a reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing and a negligent defendant is one who should have known of a similar risk but, in fact, did not.” Commil, Slip Opn. at 6 (citing Global-Tech, 131 S.Ct. at 2070-71) (citations omitted).
With one judge dissenting, the opinion also concluded that, in what it described as an issue of first impression, a good-faith although incorrect belief of invalidity can negate the requisite intent for induced infringement. It had long been the law, the opinion reasoned, that a good-faith belief of non-infringement could negate the requisite intent. A good-faith belief that the patent was invalid was simply the other side of that same coin.
The Commil opinion’s implications
Like other recent Federal Circuit jurisprudence underscoring the importance of Daubert and other challenges to evidence and events in the district court, Commil underscores the import of making timely pre-trial and trial objections and bringing the right post-trial motions. (The Federal Circuit Bar Association’s Model Patent Jury Instructions changed in light of Global-Tech, but other model instructions may not have.) Given that Commil recognizes, for the first time, that a good-faith albeit erroneous belief that the patent is invalid can negate the requisite intent for induced infringement, there may be a role for opinions of counsel in cases where induced infringement is the plaintiff’s principal theory. Finally, Commil is only the most recent reminder that the Supreme Court’s renewed activity in the patent area may create as-yet-unacknowledged tensions between its precedent and the Federal Circuit’s; whether on offense or defense, trial and appellate counsel would do well to assess whether such tensions can, as happened for the defendant in Commil, turn a loss into a win.
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Sidley Austin LLP’s Patent Litigation Practice encompasses approximately 100 full-time patent litigators in offices in the Bay Area (the Silicon Valley and San Francisco), Los Angeles, Chicago, Dallas, New York, and Washington, D.C. The group and lawyers in it are regularly included in various ranking entities’ “best of” lists, and in 2011 Chambers USA identified us as its “IP Litigation Team of the Year.” We litigate and try patent cases before District Courts throughout the country and before the International Trade Commission; have handled a number of significant patent appeals, including eBay Inc. v. MercExchange, 547 U.S. 388 (2006), which changed the law regarding preliminary injunctions; and have served as amici in numerous significant patent appeals before the Supreme Court and the United States Court of Appeals for the Federal Circuit, including Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012) (patentability under § 101); Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc) (correct inequitable conduct standards); and Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) (en banc).
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